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Beer market continues to shrink

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Beer market continues to shrink

June 01
14:19 2011

TOTAL beverage retail sales in Australia have declined for the first time in four years, driven by continued weakness in packaged beer and early signs that initial strong demand for low-carb and premium beer could be waning.

Any weakness in the premium beer category could prove damaging for the nation’s leading brewers, Foster’s and Lion Nathan, as well as Foster’s suitor SABMiller and Coca-Cola Amatil.

The latter have been heavily chasing the premium market through their local brewing joint venture, Pacific Beverages.

Advertisement: Story continues below Traditional beers such as VB and Tooheys have suffered a fall in sales volumes over the past few years, while premium beers like Coopers, Peroni and Blue Tongue have bucked the trend with strong growth.

Now that growth could be in doubt, raising concerns that premium beer has reached its zenith as a ”hot” beverage category.

The 2011 Wider Beverage Report found that, for the first time since 2006, total beverage retail sales values fell last year. Total beverage – alcoholic and non-alcoholic – volumes also fell over the past year.

Liz Watkinson, director for Nielsen's liquor services

Liz Watkinson, director for Nielsen’s liquor services, said packaged beer had been a key component in the decline. ”It represents the largest beverage segment and accounts for nearly one dollar in every four spent in the beverage category,” she said. ”This is the first time we’ve seen the segment decline in over four years, as the traditional low-carb and premium beer growth engines no longer appear to be fuelling the category.”

The bleak outlook for packaged beer was reinforced this year by the Foster’s chief executive, John Pollaers, who said at the group’s half-year result that beer consumption had fallen 7 per cent in the first half. It is expected to fall another 3-4 per cent in the June half and not to return to historic trends of 0.5-0.7 per cent growth for some time.

Edward Butler, an IBISWorld analyst, said premium beer was a relatively new entrant to the market and its growth originally was about ”fulfilling a niche that didn’t exist before it popped up”.

”What we are seeing now is that once premium beer has hit that natural [market share] … growth was inevitably going to slow and that’s happening now,” Mr Butler said.

”Overall beer consumption in Australia is gradually dropping for a variety of reasons. Premium beer has hit its equilibrium and now it’s going to follow the same trend as [traditional] beer consumption.”

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